It has been a very disappointing month for the Westpac Banking Corp (ASX: WBC) share price.
Since the start of November the banking giant's shares have fallen a whopping 14.5%.
Why is the Westpac share price sinking lower?
Investors have been selling the bank's shares this month after AUSTRAC alleged that Westpac breached the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act on a massive 23 million occasions.
Given that Commonwealth Bank of Australia (ASX: CBA) copped a $700 million fine for 53,750 alleged breaches, there are concerns that Westpac could be given a far greater penalty for its millions of breaches.
Another concern is that Westpac's shares are now trading lower than the price it recently raised $2 billion at through an institutional placement. These funds were raised at $25.32, which compares to the current share price of $24.81.
Westpac launched the capital raising in order to provide an increased buffer above APRA's unquestionably strong CET1 capital ratio benchmark of 10.5%.
Now there is a real danger that these funds could be wiped out by AUSTRAC's penalty, potentially meaning Westpac will have to raise even more funds in the near future.
Share purchase plan.
Westpac is also aiming to raise $500 million via a share purchase plan.
These funds will be raised at the lower of the placement price and the volume weighted average price of Westpac shares traded on the ASX during the five trading days up to, and including, the SPP closing date (Dec 2), less a 2% discount.
However, in light of the AUSTRAC scandal and following discussions with ASIC, this morning Westpac announced that it will give investors the option to withdraw from the share purchase plan.
Applicants can withdraw their application by 5pm on December 6 and receive a full refund.
